Grenada Lakes Medical Center: The Hospital’s Branch of the Allegiance IOP Case
In the Grenada Lakes Medical Center fraud case, the hospital agreed to pay more than $1.1 million to resolve allegations that it billed Medicare for medically unnecessary intensive outpatient psychotherapy. Allegiance Health Management performed the services on the hospital’s behalf. Grenada sent the claims directly to Medicare. The company running the treatment and the institution asking taxpayers to pay for it occupied different parts of the same operation.
The Justice Department announced the hospital’s settlement on August 6, 2018. Its announcement also calls the hospital Grenada Lake Medical Center. The allegations covered claims from January 2005 through April 2013. A former Allegiance program manager brought the whistleblower lawsuit behind the resolution.
The Hospital’s Role in the Medicare Claim
Grenada billed Medicare for intensive outpatient psychotherapy that Allegiance performed on its behalf. The government alleged that the hospital sought and received reimbursement for services that were not medically reasonable or necessary. The hospital’s own billing was the connection between the treatment program and Medicare’s money.
Allegiance was a post-acute health care management company based in Shreveport, Louisiana. Grenada was a publicly owned hospital. The arrangement matters to a hospital billing employee: an outside company supplied the treatment, but the hospital submitted the claim. We examine the care described in the program’s records alongside the services represented on the hospital’s claims.
The whistleblower had worked for Allegiance as a program manager at the Inspirations Outpatient Counseling Center at Wesley Medical Center in Hattiesburg, Mississippi. A manager at one Allegiance site helped bring a case against a different hospital.
Allegiance’s Program Allegations
In Allegiance’s separate settlement, the government alleged that its Inspirations centers submitted, or caused hospitals to submit, unnecessary intensive outpatient psychotherapy claims involving patients who did not qualify, treatment plans that were not individualized, inadequate tracking of patient progress, inappropriate treatment intensity and recreational services presented as therapeutic care.
What an Intensive Outpatient Day Is Supposed to Hold
Medicare’s separate intensive outpatient program benefit began January 1, 2024, after the Grenada claim period. Under the September 2026 IOP requirements, the patient’s plan must call for at least nine hours of therapeutic services weekly. Services also require physician certification and an individualized written plan of care.
Physician recertification addresses the patient’s response, continuing symptoms and discharge coordination. Those requirements put the patient’s course of treatment back in front of the physician, rather than leaving the initial plan to stand alone as care continues.
For hospital outpatient billing, the Medicare claims manual ties a payable program day to qualifying services. The reported services, dates, units and charges feed the daily payment. That is why what fills the day matters financially as well as clinically: the treatment recorded for the patient helps determine the program’s bill.
Physician and psychologist professional services can sit alongside the program’s work under separate payment rules. The program claim and the treating professional’s work therefore need their own scrutiny. An insider may know the services delivered without seeing every claim the facility submits. We look at the connection between those services and the bill, with the payment rules for the dates involved.
How Much of a Settlement Does a Whistleblower Get?
A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In Grenada’s case, the Justice Department announced that the former program manager would receive a share of the hospital’s settlement.
The hospital’s resolution came through a coordinated effort by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the Eastern District of Arkansas, and the Department of Health and Human Services’ Office of Audit Services and Office of Inspector General.
You Know the Program Behind the Claim
If you know how an outpatient program’s treatment, records and hospital billing fit together, talk with our whistleblower experts about what you saw. We work with you to build the case around that knowledge and bring in healthcare fraud whistleblower lawyers who understand hospital and intensive outpatient billing. You have a partner beside you from the first conversation through the pursuit of a recovery.
